Suppose a monopolist mistakenly believes that its marginal revenue is always equal to the market price. Assuming
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Suppose a monopolist mistakenly believes that its marginal revenue is always equal to the market price. Assuming constant marginal cost and no fixed cost, draw a diagram comparing the level of profit, consumer surplus, total surplus, and deadweight loss for this misguided monopolist compared to a smart monopolist.
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As shown in the accompanying diagram a profitmaximizing monopolist produces QM the output level at w...View the full answer
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